Previous to July passed French DST, any foreign company managing a digital platform was already required to observe a number of reporting obligations like delivering user’s activity reports to the users and also to the French Tax Authorities.
For the report to the Tax Authorities, the first deadline will actually be January 31st, 2020 becaue of the early French transposition of EU VAT Directive 2006/112/EC article 242 bis. Across Europe such Directive will be in effect from 2021 onwards.
On top of the individual or corporate digital platform users identification data to be reported, a recent draft decree published indicates that online platforms must also provide the amount of revenue obtained in transactions conducted with French users when they are subject to French VAT.
The penalty regime associated to the absence of compliance of the potential obligations under this draft could attract a penalty equal to 5% of the understated or undeclared revenue.
The aim of the French Tax Administration is a higher involvement of Digital Platforms as key economic actors in addressing VAT fraud in the transactions affected by such directive, a movement that started strongly few years ago in the Latin-america region for instance.
This revenue information required, together with the DST reported information could be used also for Corporate Tax Permanent Establishment review purposes, and for strong indiciary profit attribution determination during a tax audit.
The international landscape of reporting / cooperative obligations for Digital platforms is becoming more and more complex, onerous and fragmented with relevant differences of the platforms “in-scope” of these obligations.
A balanced discussion on this topic should happen also soon on a coordinated international basis as these requirements are affecting new business model digital platforms, as well as payment intermediaries or telco providers, depending on the side of the world we are.